Tight supplies and unprecedented demand from the renewable fuels sector will likely prompt some growers to shift acreage away from soybeans this spring and plant more corn. But that's not to say beans are losing value. In Nebraska, thieves stole about $12,000 worth of soybeans from a grain dryer recently and the local Sheriff's office claims it will be tough -- if not impossible -- to get it back. The incident is demonstrative of how crazy things are getting with these higher prices. And nowhere has the ride been more wild than at the Chicago Board of Trade.
The market continues to ride the wave of last week's USDA crop report. As the bell rang on the holiday shortened-week, the market opened limit-up. With a record number of futures and options contracts traded on Tuesday, the market went down slightly as bulls did some profit-taking. By mid-week the March contract vaulted over the $4.20 mark for the first time in 10 years.
The market's explosive rally is due to USDA revisions, last week, of both the crop and ending stocks for 2006. Even with farmers harvesting 10.5 billion bushels of corn -- the 3rd largest crop on record -- USDA projects ending stocks at only 752 million bushels.
The trade is left to ponder numerous variables including the impact of speculative funds in an already volatile market, a potentially dramatic shift in corn acreage, and, as always, the impact of Mother Nature.